Budgeting and Savings Tips


Six Ways to Track Your Spending 
In addition to the intricacies of your chosen course of study, you will need to learn something else during your time at UMB: How to live on a fixed income.

Since your income figure will more than likely remain fixed during large parts of your graduate or professional school experience, there may be little to no wiggle room with how much comes in. However, there are plenty of alternatives to arriving at how much cash goes out.

We have put together a list of popular expense tracking methods for you to explore, along with their positive and potentially negative traits.

1. Receipts

This method involves keeping your receipts from every purchase (or ATM transaction) and totaling the receipts periodically. At the end of each period (daily, weekly, pay period, etc.), sort the receipts by expense category and record the transactions in a notebook or spreadsheet. Compare the totals against your budgeted amount for each category.

Plus: Receipts provide a paper trail. You will get an honest look at your spending habits. You can use the receipts to fine-tune your budget. 

Minus: Not all merchants give receipts without being asked. The gap between when a transaction occurs and when the transaction is recorded allows time for losing receipts or forgetting to record them altogether. If the observation period is too long, one may easily go over spending limits for each category.

2. Envelope

This system starts with your budget. After paying large, fixed, and/or recurring items such as rent/mortgage, utilities, and car notes, you arrive at the amount of cash you have left to spend each month. Make an envelope for each category of your cash expenses. Set a dollar limit for each category and put the cash in the corresponding envelope. Once you have spent the cash in your envelope, your spending for the category is done for the month (in theory).

Plus: You can have your cash balance (and your balance in each category) at your fingertips. You also can see each balance decrease as you spend, which you cannot see when you use a debit or credit card. By using cash, you also avoid ATM and overdraft fees.

Minus: This method can get messy if you don’t have a safe place to carry your envelopes. If you lose an envelope away from home, chances are it will not return!

3. Calendar

Use this method to manage large recurring payments and infrequent expenses by writing their due dates on a calendar. Some common expenses that may be billed quarterly or semiannually include water, alarm monitoring, and auto insurance premiums. Other expenses that may arise infrequently include car maintenance and routine visits to a physician and/or dentist.

Plus: This method helps you plan in advance for the infrequent expenses you may forget about. Seeing all due dates on one calendar can help you be prepared as opposed to surprised when the bill arrives.

Minus: You will have to use this method in conjunction with another method to have a complete picture of your expenses. Infrequent expenses may have wide ranges (i.e., going in for an oil change and being told you need new brakes, spark plugs, etc.).

4. Checkbook

This system is the original running tally of income vs. outflows. If you receive your pay via direct deposit, be sure to check with your bank for the exact amount of the transaction before recording it in your checkbook register. Ideally, you can record transactions as they occur, adding inflows and subtracting outflows as you go.

Plus: The register comes ready-made with your checkbook. It provides an existing template for recording transactions, so all you have to do is fill in the blanks and work through a bit of simple math.

Minus: It is easy to forget to record a transaction. It also is easy to forget your checkbook, especially if you use a debit card for most transactions. If you want spending figures by category, you will have to do some sorting on the back end.

5. Notebook

This system is a hybrid of the envelope system and a checkbook register. Each time you spend cash, record the transaction with a label designating the category. Each category has a limit or an expected amount before you begin spending and as you spend, you can subtract the expense from the budgeted amount for the corresponding category.

Plus: Similar to a checkbook register, this system allows you to record expenditures as they occur with the added benefit of sorting by category at the same time.

Minus: Unless you record transactions frequently, it may be easy to miss one. Just like the checkbook, you must not leave home without it.

6. Computer

Several companies offer software packages that provide record-keeping and analysis functions for your finances. Software packages will cost you, but some companies offer free online money management tools as well.

Plus: You never have to do the math. These products provide you with quick analysis of your spending habits. “What if” projections and long-term planning may be just a few clicks away.

Minus: If you use an online outlet, you must give the site permission to access your personal information. Before enrolling in an online tool, check with your bank to see if it has an online banking equivalent.

The Bottom Line

Your Income – Your Expenses = Your Surplus or Your Deficit

The part of the equation that matters most is you! You will need to find the method that works for you and your money. No method is guaranteed to work for everyone, but when it comes to tracking your money, using any of these methods is better than using no method. 

Disclaimer: The contents of this article are for informational purposes only. Any mention of a product does not constitute an endorsement by the Office of Student Financial Assistance nor the Office of Financial Education and Wellness.